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Bigger fines imposed in minimum wage crackdown

"Rogue" employers who do not pay their workers the National Minimum Wage (NMW) will face an increased penalty of up to £20,000, as part of the government's crackdown on employers who break the law.

Currently employers that break NMW law must pay the unpaid wages, plus a financial penalty of 50% of the total underpayment for all workers found to be underpaid. The maximum penalty an employer can currently face is £5,000.

Now the government plans to increase the financial penalty percentage from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will increase from £5,000 to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be in force in February 2014.

The government intends to bring in legislation at the earliest opportunity and is planning to ensure that the maximum £20,000 penalty can apply to each underpaid worker.

Vince Cable, business secretary, said: "Anyone entitled to the National Minimum Wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crack down on those who do not play by the rules. The message is clear – if you break the law, you will face action."

Cable continued: "As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due. We are working with HM Revenue and Customs (HMRC) to investigate non-compliance and facilitate prosecutions in the most serious of cases."

He added: "The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce. The intention is to penalise those with the highest levels of arrears. Employers who are found to have made underpayments of more than £20,000 to any worker after the new laws come into force will not only pay the new higher level of penalties, but will face this penalty for each such worker."

Meanwhile, Chancellor George Osborne told the BBC he wants to see an above-inflation increase in NMW.

He said the country "can now afford" to raise the rate, currently £6.31 per hour for employees over 21.